A Product Market Fit Show | Startup Podcast for Founders
00:00:00 · Poojan Kumar, Pablo Srugo
[00:00:00] S0: I say some things become easier. You can say maybe fundraising becomes easier. But overall, the startup experience doesn’t become easy. It’s as hard every single time. It’s fun every single time. If you enjoy that journey, it’s as hard every single time, but nobody cares. Every person you’re working with, employee, anybody, or investor, it doesn’t matter what happened in the past. It’s what’s happening today. [00:00:21] S1: Welcome to the Product Market Fit Show, brought to you by Mistral, a seed-stage firm based in Canada. I’m Pablo. I’m a founder turned VC. My goal is to help early-stage founders like you find product market fit. Poojan, welcome to the show. [00:00:39] S0: Thank you, Pablo. Really appreciate doing this. [00:00:41] S1: I’m looking through Crunchbase here, which is usually how I start before I jump into these. You started this company in 2017, Clumio. You raised $11 million Series A. Two years later, you get preempted on this $40 million Series B. From a fundraising perspective, it’s like a founder’s dream <laugh> But I think talking to you earlier, a lot of the success you’re having now with Clumio, especially on the fundraising side, had to do with what you accomplished before. You’re a repeat founder and you had another company before Clumio that was acquired, raised about $60 million and was ultimately acquired. Maybe let’s start there. What was your first company? Maybe walk us through what you were working on and what those early days was like, what the origin story was for PernixData, your first company.
00:01:30 · Poojan Kumar, Pablo Srugo
[00:01:30] S0: Absolutely. I think if you look at my career, I spent about 10 years at Oracle and a couple years at VMware before I started the first company. I’ve really not been part of startups if you may, or for that matter, even raised capital and things like that. It was extremely hard, and it’s just basic things as you can imagine, even getting an introduction to a VC. Which VC do you go to? How do you go figure that out? Because obviously there is a lot of options available in the Bay Area, but then how do you approach it? Just even more simpler things like, okay, where do you go and what does the deck look like? You want to raise a seed. What does a deck look like? What is needed in a Series A deck if you’re trying to raise Series A and things like that? I think some of those basic things, which today I can take for granted. [00:02:23] S1: Maybe just to set context like, PernixData, you were at Oracle for nine years. You were at VMware. You were doing well, and then to leave and to start a startup, how did that happen? Why did you decide to do that back then?
00:02:23 · Pablo Srugo, Poojan Kumar
[00:02:23] S1: Maybe just to set context like, PernixData, you were at Oracle for nine years. You were at VMware. You were doing well, and then to leave and to start a startup, how did that happen? Why did you decide to do that back then? [00:02:36] S0: That was always an entrepreneur by heart. I did my grad school at Stanford. I almost dropped out of Stanford, wanted to do a startup back then. Thankfully, I didn’t because bubble burst. But then after spending the time at Oracle – and I was fortunate to be in the right place at the right time, seeing some growth at Oracle with a new product that I was part of in the early days. Throughout my career, I’ve always worked on new stuff and started new things. That was the desire that I ultimately decided to put into action. [00:03:03] S1: What was Pernix ? [00:03:05] S0: Pernix was a storage startup, you can say, basically trying to accelerate storage environments with this new device back then that was coming in in enterprise servers called Flash, which became prominent in laptops, and your iPhones, and stuff like that, and started coming into the enterprise. [00:03:25] S1: When you get this idea back then, do you just jump ship and go all in? Do you raise money first? How did you time that exit?
00:03:32 · Poojan Kumar
[00:03:32] S0: In both the startups I have done, I typically said, most of my things are more applicable to B2B, not B2C. B2C works different. But in B2B, there’s couple of things. If you can go build a quick prototype or whatever, you and your co-founders leave your job, build a quick prototype and show something, that’s one way to go raise capital. Or in both my companies at least, there was no easy way to do that. The initial alpha, beta, whatever you want to call it, did require 10, 15, 20 engineers in a good amount of time, call it year, year and half. In both cases, we had to go raise capital on an idea, on basically the idea, the market, and the team. The idea is to basically show that it’s a unique thing. Nobody is doing it right now. Market is really, if I go and build it, this is a market and this is a problem it solves. The team, just to give the confidence that, yeah, ultimately I’m asking for a multimillion dollar check, but this is the team is capable to go and execute and build on this. In both cases, we basically had gone that route. In Pernix case, we went and raised $7 million Series A with basically a PowerPoint deck with all the three things. Then Clumio did the same thing. Again, as I said, it, it varies based on what you’re doing. In my case, we had to do that because there’s no way to kind of – and there’s no point in building a prototype and showing that we had the background to go and say that, yes, we can build this. Now, it was about going and convincing somebody that, yes, it’s unique and there is a big market to go after.
00:05:07 · Pablo Srugo
[00:05:07] S1: How did you do that? With Clumio, I get it, because at that point, you’re a founder with a large exit. You’re proven. When you’re repeat founder, successful repeat founder, it’s frankly just a lot easier to raise. But with Pernix, to go out and raise $7 million on a deck, I can tell you, I meet so many founders and very few are able to do that. I know that as a founder, I think people listening to this must be like, what did he do? What was the magic? What was the secret to actually getting $7 million? It’s not $1 million. It’s $7 million off of a PowerPoint presentation. Maybe you can take us through what’s your advice, and also what is it that you think you did right, specifically with Pernix to be able to raise $7 million off of a PowerPoint, as you said?
00:05:53 · Poojan Kumar
[00:05:53] S0: It wasn’t easy. I would say that was always a desire. At any point in time, just take a step back, you raise a round of financing. It’s meant to take you from Point A to Point B. The goal was for us to go raise that $7 million of Series A. We had made a plan saying that if we are able to raise that, then I can go and build a shippable product, and then I’m ready for Series B. Basically, get me through the Product Market Fit, and really go raise a Series B to really go scale. I knew that that’s not going to be easy. If I’m not able to do that, I had a backup plan, and the backup plan was go raise a million, million and a half, which I thought was definitely doable just based on the background. Because remember, I had enough close to 15 years of enterprise experience, and it was enterprise idea. I had credibility in the space. You have to be clear in your head and what you want.